Digger Inc. sells a high-speed retrieval system for mining information. It provides the following information for the year. Budgeted Actual
Overhead cost 975,000 $950,000
Machine hours 50,000 45,000
Direct labor hours 100,000 92,000

Overhead is applied on the basis of direct labor hours

Required:
a. Compute the predetermined overhead rate. (Round answer to 2 decimal places, e. g. 12.25.)
b. Determine the amount of overhead applied for the year.

a. $19.5 per machine hour

b. $877,500

Explanation:

a. The predetermined overhead rate is calculated as;

= Budgeted overhead manufacturing cost / Budgeted machine hours

Given that;

Budgeted overhead manufacturing cost = $975,000

Budgeted machine hours = $50,000

Predetermined overhead rate = $975,000 / $50,000

= $19.5 per machine hour

b. Applied overhead rate is calculated as;

= Predetermined overhead rate × Actual machine hour

Given that predetermined overhead rate = $19.5 per machine hour

Actual machine hour = 45,000

Predetermined overhead rate

= $19.5 × 45,000

= $877,500

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know